Diversification Is The Key To Survival

The Big Idea

In New York this past week, Lief and I have met the retired Minister for Foreign Investment for Macedonia (more on this in a minute)…a friendly Greek selling old maps of his country on the street corner…an ambitious Mexican working hard to make a go of his new restaurant (Trece, on 13th Street…I highly recommend it)…and a Pakistani taxi driver who went well out of his way to make sure we made it to my Bloomberg interview on time.

Everywhere we’ve been across Manhattan these past several days, we’ve met people from all over the world…travelers, businesspeople, diplomats…

“In Panama, I’m always switching between Spanish and English,” Lief remarked one afternoon, “depending who I’m talking to. Here in New York I have no idea what language to speak.”

America’s melting pot…a city with one of the most diversified populations on the planet. That’s New York.

An appropriate place for me to be addressing what I see as the most important agenda of our day. No matter who you are and no matter where you are, I can tell you what you should be spending your time and energy doing, namely:

Diversifying.

“Kathleen, how can you be promoting the idea of Americans buying real estate in other countries when the whole world right now is looking to the United States for opportunity?” asked CNBC host Kelly Evans when she interviewed me Monday morning.

A whole lot of the world seems to be in a whole lot of trouble right now, but the United States as safest global investment haven? I don’t quite buy that. On the other hand, I’d agree for sure that, given the falls that some U.S. property markets have seen over the past five years, yes, indeed, these regions of the country can offer interesting opportunities for buying low.

Does that mean that whatever portion of your portfolio you want to put into real estate should go into U.S. real estate, full stop? No way.

And it’s not that everything you’ve got should go into real estate…though, as we’re reminded of the uncertainties and limitations associated with other investment options, from securities to precious metals, I’m more bullish on property as an asset class all the time. Invest in a second home on the shores of the Caribbean, and you could rent the place out when you’re not using it, all the while day dreaming about the seafront retirement you’ll enjoy there when that stage of life eventually rolls around. Buy a little farm down Uruguay way (Uruguay is one of the easiest places in the world to do this; its farmland inventory is organized in what amounts to a niche Multiple Listing Service) and you could lease it to a local farmer short term while preparing longer term to embrace finca life when you retire.

I don’t think there’s any denying that, in today’s world, the investment you want to hold, more sensible than any other, is real estate. Your global property portfolio could include real estate in the United States. However, I’ve spent the past week in Manhattan pounding the drum for diversification, including and especially geographic diversification. Whatever money you’ve got to invest, I’d suggest putting some significant portion of it into real estate. And at least some of that should be real estate outside your home country.

Real estate overseas is a chance to diversity not only investment class but also economy, government, politics, politicians, market cycles, inflation rates, currencies, and on and on.

In all the interviews I’ve done over the past week, one question has been asked more than any other, in short:

“Buy real estate overseas? Who could really do that? I mean…isn’t that risky? Too dangerous for the average investor?”

I’m an average investor. I started out in Baltimore, Maryland…an average town. I had less-than-average assets out of the gate. I’m telling you:

You can do this, too.

How can you be sure something won’t go wrong? You can’t. It will. There are risks, and, as with any kind of investing, nothing is guaranteed. Don’t let that deter you. What’s the option? To do nothing? To keep your assets, your retirement, and your future all at home, all in one place? Would that be safer or more prudent? No.

You must diversify, both your investments and your life. It’s a necessity of the world we’re living in.

P.P.S. The retired Minister for Foreign Investment for Macedonia? Over breakfast yesterday morning, he told us about his country’s new invest-for-citizenship program. Lief is preparing a full report for subscribers to his Simon Letter. More on this private offshore advisory service here.

Kathleen Peddicord has covered the live, retire, and do business overseas beat for more than 30 years and is considered the world's foremost authority on these subjects. She has traveled to more than 75 countries, invested in real estate in 21, established businesses in 7, renovated historic properties in 6, and educated her children in 4.

Kathleen has moved children, staff, enterprises, household goods, and pets across three continents, from the East Coast of the United States to Waterford, Ireland... then to Paris, France... next to Panama City, where she has based her Live and Invest Overseas business. Most recently, Kathleen and her husband Lief Simon are dividing their time between Panama and Paris.

Kathleen was a partner with Agora Publishing’s International Living group for 23 years. In that capacity, she opened her first office overseas, in Waterford, Ireland, where she managed a staff of up to 30 employees for more than 10 years. Kathleen also opened, staffed, and operated International Living publishing and real estate marketing offices in Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France.

Kathleen moved on from her role with Agora in 2007 and launched her Live and Invest Overseas group in 2008. In the years since, she has built Live and Invest Overseas into a successful, recognized, and respected multi-million-dollar business that employs a staff of 35 in Panama City and dozens of writers and other resources around the world.

Kathleen has been quoted by The New York Times, Money magazine, MSNBC, Yahoo Finance, the AARP, and beyond. She has appeared often on radio and television (including Bloomberg and CNBC) and speaks regularly on topics to do with living, retiring, investing, and doing business around the world.

In addition to her own daily e-letter, the Overseas Opportunity Letter, with a circulation of more than 300,000 readers, Kathleen writes regularly for U.S. News & World Report and Forbes.